FIO versus liner terms: what is the difference?
Under FIO (free in and out) the charterer pays for loading and discharging, and that cargo-operations time counts as laytime. Under liner (gross) terms the owner pays for handling, and that time does not run against laytime. They are opposite ends of one cost basis.
That single distinction, who carries the cargo-handling cost and whose clock it runs on, sits underneath the freight number on almost every dry-bulk fixture. FIO is shorthand for “free in and out”: the cargo is loaded and discharged free of expense to the owner, so the freight rate covers the ocean carriage and nothing at the ports. Liner terms, sometimes called gross terms or berth terms, fold the loading and discharging cost back into the freight, which is the historical liner-service model where the carrier handled the cargo over the rail at both ends. In dry bulk the FIO family is the default and liner terms are the exception, so this page treats FIO as the working position and liner terms as the contrast pole that makes the allocation visible.
The reason the distinction matters commercially is that it moves real money and real time. A cost basis that puts loading and discharging on the charterer (FIO) lets the owner quote a leaner freight rate and keeps the laytime clock running while the cargo is worked, so a slow terminal becomes the charterer’s demurrage problem. A cost basis that puts handling on the owner (liner terms) loads that cost and that risk into the freight, and the owner has no laytime protection against a slow berth. The recap must say which basis applies, because the same vessel and lane price very differently under each.
Who pays for cargo handling under each basis
The allocation matrix below is the spine of the comparison. It sets out who bears each cargo operation, whether the handling time counts as laytime, and what the freight rate is assumed to cover, across the three FIO variants and liner terms. Read left to right, the FIO ladder adds responsibilities to the charterer one operation at a time: plain FIO covers the in-and-out movement, FIOS adds stowage, FIOST adds trimming. Liner terms reverse the whole column back to the owner.
| FIO | FIOS | FIOST | Liner terms | |
|---|---|---|---|---|
| Who pays loading | Charterer | Charterer | Charterer | Owner |
| Who pays stowage | Owner (unless agreed otherwise) | Charterer | Charterer | Owner |
| Who pays trimming | Owner (unless agreed otherwise) | Owner (unless agreed otherwise) | Charterer | Owner |
| Who pays discharging | Charterer | Charterer | Charterer | Owner |
| Cargo-operations time counts as laytime | Yes | Yes | Yes | No, handling time excluded |
| Freight basis | Ocean carriage only | Ocean carriage only | Ocean carriage only | Carriage plus load and discharge |
The gradation is the point. Plain FIO frees the owner of the cost of moving cargo across the ship’s rail in and out, but the words “in and out” do not by themselves cover stowing the cargo in the holds or trimming it level, so on a strict FIO term those operations can fall back on the owner unless the clause is extended. FIOS (“free in and out and stowed”) pulls stowage onto the charterer; FIOST (“free in and out, stowed and trimmed”) pulls trimming on as well, which matters for cargoes that must be levelled for stability and to use the cubic capacity. BIMCO’s GENCON voyage charter form expresses this in its cargo-handling clause, and the recap usually states the exact variant (“FIOST” or “FIO spout trimmed”) so there is no gap. Liner terms collapse the whole column back to the owner and, critically, stop the handling time counting as laytime, which is the voyage charter consequence that most often surprises a charterer who assumed the laytime clock behaves the same way under both bases.
The FIO variant ladder
The cost basis is best read as a ladder. At the top the charterer carries the most; at the bottom the owner carries the most. FILO and LIFO are the split-responsibility rungs where one end is on the charterer and the other on the owner, common where the load port and discharge port have very different handling realities.
| Term | Expansion | Cargo operations included | Borne by |
|---|---|---|---|
| FIO | Free in and out | Loading and discharging | Charterer (stow and trim may stay with owner unless added) |
| FIOS | Free in and out and stowed | Loading, discharging and stowage | Charterer (trimming may stay with owner unless added) |
| FIOST | Free in and out, stowed and trimmed | Loading, discharging, stowage and trimming | Charterer (the full cargo-handling scope) |
| FILO | Free in, liner out | Loading charterer, discharging owner | Split: charterer loads, owner discharges |
| LIFO | Liner in, free out | Loading owner, discharging charterer | Split: owner loads, charterer discharges |
| Liner / gross terms | Berth or gross terms | Loading and discharging | Owner (handling cost folded into freight) |
Read top to bottom, the cost moves from the charterer toward the owner. FIO, FIOS and FIOST are all charterer-side bases that differ only in how much of the in-hold work (stowage, trimming) is captured. FILO and LIFO break the symmetry: under FILO the charterer pays to load and the owner pays to discharge, under LIFO the owner pays to load and the charterer pays to discharge. They are used when one terminal is geared and efficient and the other is not, or when a sale contract has already fixed the handling cost at one end. At the bottom, liner terms put both ends on the owner. The same logic that allocates cost also allocates the laytime clock: on the charterer-side rungs the relevant handling time counts as laytime; on the liner side it does not.
How the cost basis interacts with laytime
The cost basis and the laytime regime are two different clauses, but they are wired together, and a fixture that gets one right and the other wrong produces an unintended risk split. The link is this: laytime is the free time the charterer is allowed to work the cargo, and it only bites where the charterer is the party doing (and paying for) the cargo operations. So under FIO, FIOS and FIOST the cargo-handling time is laytime, the clock starts on a valid notice of readiness, and an overrun produces demurrage. The agreed loading and discharge rate sets how much laytime the charterer gets, which is why on a FIO fixture the rate and the demurrage figure are negotiated together with the cost basis.
Under liner terms the wiring is different. Because the owner does the handling, the handling time is the owner’s own operation and does not run against any laytime allowance, so a slow berth is the owner’s exposure, not the charterer’s. The Laytime Definitions for Charter Parties 2013 (LDCP 2013, published jointly by BIMCO, CMI, FONASBA and the Baltic Exchange) standardise the phrases (“weather working day”, “Sundays and holidays excepted”) that the FIO laytime clock is counted in, which is what makes a laytime statement reproducible across fixtures. The practical takeaway is that the cost basis decides whether there is a laytime clock at all on the cargo operations: FIO creates one and hands the owner demurrage protection, liner terms remove it.
When to use FIO and when liner terms fit
The choice is driven by who controls the terminal and who is better placed to carry the handling cost and time risk.
- Use FIO (or FIOS/FIOST) when the charterer controls cargo handling. This is the dry-bulk default. Where the cargo interest or its receiver runs or contracts the loading and discharging (shore conveyors, grabs, ship’s gear arranged by the charterer), FIO puts the cost where the control is and gives the owner a clean laytime clock. Choose FIOST specifically when the cargo must be stowed and trimmed (most homogeneous bulk parcels need trimming for stability and cubic), so there is no gap over who pays for the in-hold work.
- Use FILO or LIFO when the two ends differ. Where one terminal is geared and efficient and the other is not, or a sale contract has already fixed the handling cost at one end, splitting the basis aligns each end’s cost with the party that actually controls it.
- Use liner terms when the owner is the natural handler. This is the exception in bulk and the rule in liner trades. It fits where the carrier operates a berth-to-berth service and prices handling into the freight, or where a small parcel moves on a service that includes terminal handling. The owner accepts the cost and the time risk in exchange for a higher all-in freight rate.
A useful test: if the charterer would be answerable for a slow terminal, FIO is the honest basis, because it is FIO that gives the owner the demurrage remedy for that delay. If the owner is running the cargo gear and the berth, liner terms keep the cost and the time with the party in control.
Where the FIO and liner distinction breaks down
The clean FIO-versus-liner split holds in the recap headline but frays at the edges, and three situations cause most of the confusion.
| What it looks like | Why it breaks the clean split | |
|---|---|---|
| Gross terms ambiguity | Recap says "gross terms" or "berth terms" without spelling out handling | "Gross" is read as liner in most trades but is not universally defined; the LDCP 2013 do not fix it, so the parties must state who pays and whether the time counts |
| FILO / LIFO hybrids | Charterer loads, owner discharges (or vice versa) | Laytime then runs on one end's operations but not the other, so a single combined laytime account no longer makes sense and the statement of facts must be kept per end |
| Stow and trim gap on plain FIO | Recap says "FIO" but the cargo needs trimming | Plain FIO arguably leaves stow and trim with the owner; without FIOS or FIOST wording the cost of the in-hold work is contested |
| Berth / liner-in-free-out shorthands | Mixed wording like "liner in, free out, owner to pay loading only" | Bespoke shorthands do not map cleanly onto the standard ladder and must be read against the full clause, not the acronym |
The common thread is that the acronym is a label, not the contract. Where the basis is bespoke (a split FILO/LIFO term, a “gross terms” line, a partial owner-pays carve-out) the operative words are in the cargo-handling clause and the laytime clause, and those govern over the shorthand. P&I clubs regularly flag cargo claims that turn on exactly this gap, where a recap said “FIO” but the stowage or trimming responsibility was never pinned down. The drafting discipline is to name the variant in full and to state expressly whether the handling time counts as laytime, rather than to rely on the acronym carrying the whole allocation.
FIO on a Capesize iron ore fixture
Scope and what this page does not cover
This page explains FIO and its variants (FIOS, FIOST, FILO, LIFO) and contrasts them with liner terms as a commercial cost basis: who pays for cargo handling, whether that time counts as laytime, and how the basis shows up in a real bulk fixture. It does not draft jurisdiction-specific cargo-handling or stowage-responsibility clauses, resolve a contested cargo claim over who was liable for bad stowage or trimming, opine on the meaning of “gross terms” under a particular governing law, or quote handling rates or freight differentials for any specific lane. Those questions are matters for chartering counsel and the desk’s operations team, working from the actual charter party and the signed statement of facts. The worked figures here are representative and anonymised, not market quotes.